What if some deep-pocketed group of entities began to aggressively sell the rand short right before the rand's decay went parabolic? Note the period of relative stability in the rand in the graph above right before the white arrow. What caused the rand to plunge suddenly on no news? As George Soros has abundantly proved, aggressively shorting a currency and calling a sovereign government to task for its horrible mismanagement of its fiscal affairs can yield legendary profits if properly executed. For example, the short-sellers could have sold massive quantities of rand when it was worth $0.12 (about R8) and bought back to cover their shorts at $0.08 (about R12.5) for enormous profits.

The recent gut-wrenching plunge of the rand may indeed prove to simply be a coincidental mass exodus from the rand in global FOREX markets due to rampant South African government mismanagement of its currency. Or it may prove to be a well-orchestrated speculative attack motivated purely by rand-shorting profits. However, with no clear and direct evidence yet surfacing to clearly suggest one of the above options, the slide in the rand may have been initiated by other forces. More on this front a little further below.

"Many theories exist trying to explain the recent speculative attack on the South African currency, but the most provocative we have heard came from a friend. What if the anti-gold forces are having a tougher time seducing central bank gold onto the market due to the collapsing gold-carry-trade profits? (see our"Rate Cut Scorecard Round Two" essay) What if they desperately need to increase the mined gold supply to meet insatiable Asian demand but are deathly afraid of a dollar gold rally that could spark enough Western investment demand to blow the lid off the gold-capping operations? By launching a speculative attack on the relatively small rand currency, the anti-gold forces, if they are behind this, could elegantly achieve both strategic objectives. Aggressively shorting the rand causes the rand gold price to rocket, but the dollar gold price remains as lethargic as ever. Higher rand gold prices enable the largest gold producing and exporting country in the world, South Africa, to dramatically increase gold output if the rand's swoon is sustained. The net result? More South African gold is supplied to the world markets to meet growing demand but gold stays under the Western investment world's radar since the dollar price is static. Interesting cannon-fodder for thought since no one seems to have a concrete explanation of why the rand is being obliterated!"



<ul> ~ http://www.gold-eagle.com/gold_digest_02/hamilton012802.html</ul>
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